The corporate implications of marijuana legalization

On Friday, Nov. 13, Prime Minister Justin Trudeau made the first step towards fulfilling one of his most discussed campaign promises: Legalizing marijuana. In a letter to the Minister of Justice Jody Wilson-Raybould, Trudeau asked her to begin looking into a “process that will lead to the legalization and regulation of marijuana.” Now that the question of whether or not marijuana should be legalized has been replaced by the question of how it will be legalized, the question must be what marijuana legalization really means from an economic perspective. Canadians have to be wary of the corporatization of marijuana, and the possibility of the profit landing in the hands of a few individuals.

Activists have been protesting against prohibition for years, and have advocated for the legal distribution of the drug in what they deem to be a quest for justice. The criminalization of marijuana possession is seen as a misuse of public tax money. The cause has swept across the nation; according to a 2015 forum poll of a random sampling of Canadian voters, 60 per cent of respondents approve of marijuana legalization. Many assert that Canadians (of legal age) should have the opportunity to safely access the drug. Legalization would ultimately help to regulate underage use of marijuana, and promote awareness about the effects and consequences of the drug, treating it as a health issue rather than a criminal issue.

While the poll is by no means decisive, it indicates that the tide has turned in favour of legalization. Gone are the days of staunch moralism, but in this new context Canadians must maintain focus on the implications of legalization. They must be wary of potential problems relating to the structure of marijuana distribution. In the aforementioned poll, 18 per cent of adults admitted to using marijuana in the past year, and an additional 13 per cent who do not currently use it are now likely to use it legally. The expected market for pot is three out of every 10 adults, which suggests a consumer-base of approximately eight million Canadians. The current worth of the medical marijuana industry is between $80 and $100 million a year, and analysts estimate that the market for legal marijuana could top $5 billion, with $1 billion in government tax revenues. The tremendous size of this emerging industry begs various questions about how marijuana will be regulated, and who will profit from its sales.

Ohioans supported the idea of legalizing pot, but decided that the vast economic implications were far too divisive. It will be up to the Canadian government to decide how the industry will be structured—a decision that may have an enormous social impact.

Canada must take heed of what has taken place to the south. In Ohio, the answers to those questions led to a statewide controversy, which eventually resulted in a rejection of the legalization initiative on Nov. 3. Yet 65 per cent of those who voted “No” “rejected the idea of monopoly, not legalization.” Essentially, Ohioans supported the idea of legalizing pot, but decided that the vast economic implications were far too divisive. It will be up to the Canadian government to decide how the industry will be structured—a decision that may have an enormous social impact.

The Ohio Marijuana Legalization Initiative proposed a system in which just 10 marijuana farms that would be run by wealthy campaign donors, transforming pot into an oligopolistic industry. Legalization activists were forced to watch as the ‘corporate takeover’ of marijuana destroyed the authenticity of their cause, as new actors came into the realm that were primarily concerned with profit, and not motivated by a sense of injustice. Pro-legalization groups began to vocally oppose the legal marijuana initiative, referring to the distribution structure as “crony capitalism at its worst,” and calling it a “constitutionalized drug cartel.”

Ohio has shown us that the details behind how to legalize pot can lead to dispute and division; it is clear that the debate about how to structure and regulate marijuana distribution becomes larger than the discussion about whether or not it should be legal. Canadian citizens and the Liberal government need to be cautious about similar effects happening in Canada, given the extreme value of the industry that has already been projected. Before Canadians get too excited, it’s important that Canada takes note of the profit in pot, and exactly who it would go to.

Alexandra is a U1 student studying Political Science and International Development. She is a proud Torontonian, passionate traveler, and knows all the lyrics to "Bohemian Rhapsody."